How to make financial resolutions that stick

Trying a new hobby. Losing a few pounds. Learning a new language. Dating more (or less, maybe?), visiting friends, doing yoga…they’re all great New Year’s Resolutions.

When the last page of the calendar falls and we replace it with a brand-spanking-new one, we try and figure out what the best version of ourselves looks like going into the new year. But as we all know, resolutions don’t always last, especially when it comes to our finances.

Here are a few things you can do to make your money last longer, do more, and grow, grow, grow.

Finish Strong

If you haven’t already, this is a great time to look at what you accomplished last year with regards to your finances. Maybe you purchased your first home or your first new car. Maybe you wish you had saved more or budgeted better. Be honest with yourself about what you did and didn’t do with your money and take the time to assess your assets, your debts, your savings and your income.

The post-holiday season is also a great time to look for deals on essentials from stores and shops that are overstocked and are looking to move merchandise. Seek out end-of-year (or start-of-year) clearance specials. Use this opportunity to make returns and exchanges for gifts that didn’t quite suit your needs (really, Aunt Beverly? Another coffee mug with a dolphin on it?) and use the cash back or store credit to your advantage. This is also a great time to inventory your gift cards and figure out ways to use them effectively.

Figure Out What Matters

Before you bother creating a budget, think big: what do you really want to happen in the coming year? New house? Move out of your apartment? Get the car of your dreams? Go back to school? Be honest with yourself about all the aspects of your financial life that you want to change or the milestones you want to achieve. Take the extra step of writing them out on a piece of paper and keep examining them throughout the year.

Don’t be too broad with your goals – get specific! Don’t just say “I want more money,” be honest about what you want that money for: “I want to have more money saved in case of an emergency or shortfall,” or “I want to have more money on hand so I can travel.” The more defined your goals are, the more deliberate you can be about meeting them.

…And Then, You Budget

To meet your goals, you’ll need a thorough accounting of your money – not just what you have saved, but your your income, your debts (both short- and long-term), your obligations (rent costs, food costs, car upkeep and gas, etc.), and the goals you’ve identified.
A simple way to get started is to utilize the “50/30/20” approach.

1. 50% of your money should take care of your Needs
2. 30% of your money should take care of your Wants
3. 20% of your money should go into Savings.

Let’s say, for example, you clear $4,000 in a month. $2,000 should cover your costs of living and all the essentials, like food. $1,200 should cover things like hobbies, eating out at restaurants, entertainment (like streaming services or gaming passes), spa treatments, etc. $800 should go straight into savings.

When it comes to the “Needs,” it never hurts to start negotiating costs and finding cheaper alternatives. Speak to your wireless providers about ways to minimize your bills through their customer retention channels. Start using coupons and taking advantage of weekly savings at grocery stores and at service providers (like your mechanic). This is also the time to assess your income and talk to your boss about the likelihood of a raise…or to start looking into another employer who might offer you more money. You might be surprised how many of your regular expenses can be negotiated or discounted.

When it comes to “Wants,” the key is to start hunting for deals. Travel sites and couponing apps can be very helpful in getting you the right deal at the right time. Check out apps that automatically apply coupons at checkout. You also might consider leveraging credit that pays you points on your purchases (airline miles, cashback bonuses, etc.).

As for “Savings,” keep that 20% in a safe place where you won’t be tempted to shift it around and turn it into spending money. The entire point of savings is to help satisfy long-term goals and to prepare you for shortfalls and unexpected expenses; for example, if your car breaks down and needs expensive repairs or if you run into a health-related emergency, which happens all too frequently.

Be Nice to Yourself

As with any New Year’s Resolution, it can be easy to make mistakes or take missteps. Sometimes you’ll have to skip a yoga class or eat a piece of chocolate cake (because let’s face it, we all need a little cake sometimes). Sometimes you will spend a little more than you should. Sometimes you will strike out on a good deal and have to settle for a full-price expenditure. Don’t beat yourself up – it happens. Just because you have a minor setback is no reason to abandon your budget and your goals altogether. Keep telling yourself: “I am capable of achieving my goals and I know I can do it.”

Another important way to stay on target: don’t wait until the end of the year to check in with each goal and see how you’re doing. Make an appointment with yourself at the start of each new season (Spring, Summer, Fall and Winter) and take stock: have you saved enough money for a down payment? Is your trip to Mexico completely paid for yet? How are your debts looking?

The year ahead will be filled with fun, challenges, good times, setbacks – everything that makes life colorful. Knowing that you can afford to meet both good times and tough times and keep your head above water will make every moment that much sweeter.

Now, how do you return a dolphin mug without a gift receipt?